119-hr1293

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1293 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1293

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
 and fees for increasing motor vehicle fuel economy, and for other 
 purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 February 13, 2025

Mr. Casten (for himself and Ms. Matsui) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
 to the Committee on Energy and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
 of such provisions as fall within the jurisdiction of the committee 
 concerned

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
 and fees for increasing motor vehicle fuel economy, and for other 
 purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Vehicle Energy 
Performance Act of 2025''.

    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. TAX CREDIT FOR VEHICLE ENERGY PERFORMANCE.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to other credits) is amended by inserting after 

section 30D 
the following new section:

``

SEC. 30E. VEHICLE ENERGY PERFORMANCE REBATE.

 ``

    (a) Allowance of Credit.--
 ``

    (1) In general.--There shall be allowed as a credit 
 against the tax imposed by this chapter for the taxable year an 
 amount equal to the amount determined under paragraph

    (2) with 
 respect to any new qualified high energy performance motor 
 vehicle placed in service by the taxpayer during the taxable 
 year.
 ``

    (2) Credit amount.--With respect to each new qualified 
 high energy performance motor vehicle, the amount determined 
 under this paragraph shall be equal to the amount (not greater 
 than $5,000) that bears the same ratio to $5,000 as--
 ``
        (A) the excess of--
 ``
            (i) the vehicle energy performance of 
 such vehicle, over
 ``
            (ii) the median vehicle energy 
 performance for the model year immediately 
 preceding the model year of such vehicle, bears 
 to
 ``
        (B) the excess of--
 ``
            (i) the best vehicle energy performance 
 for the model year immediately preceding the 
 model year of such vehicle, over
 ``
            (ii) the median vehicle energy 
 performance for the model year immediately 
 preceding the model year of such vehicle.
 ``

    (b) New Qualified High Energy Performance Motor Vehicle.--For 
purposes of this section, the term `new qualified high energy 
performance motor vehicle' means a passenger automobile or light 
truck--
 ``

    (1) which is treated as a motor vehicle for purposes of 
 title II of the Clean Air Act,
 ``

    (2) which achieves vehicle energy performance that is 
 greater than the median vehicle energy performance for the 
 model year immediately preceding the model year of such 
 vehicle,
 ``

    (3) for which standards are prescribed pursuant to 
 

section 32902 of title 49, United States Code,
 ``

    (4) the original use of which commences with the 
 taxpayer,
 ``

    (5) which is acquired for use or lease by the taxpayer 
 and not for resale, and
 ``

    (6) which is made by a manufacturer beginning with model 
 year 2027.
 ``
            (c) Application With Other Credits.--
 ``

    (1) Business credit treated as part of general business 
 credit.--So much of the credit which would be allowed under 
 subsection

    (a) for any taxable year (determined without regard 
 to this subsection) that is attributable to property of a 
 character subject to an allowance for depreciation shall be 
 treated as a credit listed in 

section 38

    (b) for such taxable 
 year (and not allowed under subsection

    (a) ).
 ``

    (2) Refundable personal credit.--
 ``
        (A) In general.--For purposes of this title, the 
 credit allowed under subsection

    (a) for any taxable 
 year (determined after application of paragraph

    (1) ) 
 shall be treated as a credit allowable under subpart C 
 for such taxable year (and not allowed under subsection

    (a) ).
 ``
        (B) Refundable credit may be transferred.--
 ``
            (i) In general.--A taxpayer may, in 
 connection with the purchase of a new qualified 
 high energy performance motor vehicle, transfer 
 any refundable credit described in subparagraph
        (A) to any person who is in the trade or 
 business of selling new qualified high energy 
 performance motor vehicles and who sold such 
 vehicle to the taxpayer, but only if such 
 person clearly discloses to such taxpayer, 
 through the use of a window sticker attached to 
 the new qualified high energy performance 
 vehicle--
 ``
            (I) the amount of the refundable 
 credit described in subparagraph
        (A) with respect to such vehicle, and
 ``
            (II) a notification that the 
 taxpayer will not be eligible for any 
 credit under 

section 30D with respect 
 to such vehicle unless the taxpayer 
 elects not to have this section apply 
 with respect to such vehicle.
 ``
            (ii) Certification.--A transferee of a 
 refundable credit described in subparagraph
        (A) may not claim such credit unless such claim is 
 accompanied by a certification to the Secretary 
 that the transferee reduced the price the 
 taxpayer paid for the new qualified high energy 
 performance motor vehicle by the entire amount 
 of such refundable credit.
 ``
            (iii) Consent required for revocation.--
 Any transfer under clause
            (i) may be revoked 
 only with the consent of the Secretary.
 ``
            (iv) Regulations.--The Secretary may 
 prescribe such regulations as necessary to 
 ensure that any refundable credit described in 
 clause
            (i) is claimed once and not 
 retransferred by a transferee.
 ``
            (d) Other 

=== Definitions. ===
-For purposes of this section:
 ``

    (1) Vehicle energy performance.--The term `vehicle energy 
 performance' means, with respect to any vehicle, the combined 
 fuel-economy rating determined for the model and model year of 
 such vehicle.
 ``

    (2) Median vehicle energy performance.--The term `median 
 vehicle energy performance' means, with respect to any model 
 year, the median combined fuel-economy rating for all new motor 
 vehicles of such model year sold in the United States.
 ``

    (3) Best vehicle energy performance.--The term `best 
 vehicle energy performance' means, with respect to any model 
 year, the highest combined fuel-economy rating of any model of 
 motor vehicle of such model year sold the United States.
 ``

    (4) Combined fuel-economy rating.--The term `combined 
 fuel-economy rating' means the combined fuel-economy rating 
 determined in accordance with 

section 32908 of title 49, United 
 States Code, and expressed in miles per gallon of gasoline 
 equivalent.
 ``

    (5) Model year.--The term `model year' has the meaning 
 given such term under 

section 32901

    (a) of such title 49.
 ``

    (6) Motor vehicle.--The term `motor vehicle' means any 
 vehicle which is manufactured primarily for use on public 
 streets, roads, and highways (not including a vehicle operated 
 exclusively on a rail or rails) and which has at least 4 
 wheels.
 ``

    (7) Other terms.--The terms `automobile', `passenger 
 automobile', `light truck', and `manufacturer' have the 
 meanings given such terms in regulations prescribed by the 
 Administrator of the Environmental Protection Agency for 
 purposes of the administration of title II of the Clean Air Act 
 (42 U.S.C. 7521 et seq.).
 ``

    (e) Special Rules.--
 ``

    (1) Basis reduction.--For purposes of this subtitle, the 
 basis of any property for which a credit is allowable under 
 subsection

    (a) shall be reduced by the amount of such credit so 
 allowed (determined without regard to subsection
            (c) ).
 ``

    (2) Property used by tax-exempt entity.--In the case of a 
 vehicle whose use is described in paragraph

    (3) or

    (4) of 
 

section 50

    (b) and which is not subject to a lease, the person 
 who sold such vehicle to the person or entity using such 
 vehicle shall be treated as the taxpayer that placed such 
 vehicle in service, but only if such person clearly discloses 
 to such person or entity in a document the amount of any credit 
 allowable under subsection

    (a) with respect to such vehicle 
 (determined without regard to subsection
            (c) ). For purposes of 
 subsection
            (c) , property to which this paragraph applies shall 
 be treated as of a character subject to an allowance for 
 depreciation.
 ``

    (3) Property used outside united states, etc., not 
 qualified.--No credit shall be allowable under subsection

    (a) with respect to any property referred to in 

section 50

    (b)

    (1) or 
 with respect to the portion of the cost of any property taken 
 into account under 

section 179.
 ``

    (4) Recapture.--The Secretary shall, by regulations, 
 provide for recapturing the benefit of any credit allowable 
 under subsection

    (a) with respect to any property which ceases 
 to be property eligible for such credit.
 ``

    (5) Election not to take credit.--No credit shall be 
 allowed under subsection

    (a) for any vehicle if the taxpayer 
 elects to not have this section apply to such vehicle.
 ``

    (6) Interaction with air quality and motor vehicle safety 
 standards.--A motor vehicle shall not be considered eligible 
 for a credit under this section unless such vehicle is in 
 compliance with--
 ``
        (A) the applicable provisions of the Clean Air 
 Act for the applicable make and model year of the 
 vehicle (or applicable air quality provisions of State 
 law in the case of a State which has adopted such 
 provisions under a waiver under 

section 209

    (b) of the 
 Clean Air Act), and
 ``
        (B) the motor vehicle safety provisions of 
 sections 30101 through 30169 of title 49, United States 
 Code.
 ``

    (7) Inflation adjustment.--In the case of any model year 
 beginning in a calendar year after 2027, each dollar amount in 
 subsection

    (a)

    (2) shall be increased by an amount equal to--
 ``
        (A) such dollar amount, multiplied by
 ``
        (B) the cost-of-living adjustment determined 
 under 

section 1

    (f)

    (3) for the calendar year in which 
 the model year begins, determined by substituting 
 `2026' for `2016' in subparagraph
        (A)
            (ii) thereof.
 Any increase determined under the preceding sentence shall be 
 rounded to the nearest multiple of $100.
 ``

    (8) One credit per vehicle.--In the case of any vehicle, 
 the credit described in subsection

    (a) shall only be allowed 
 once with respect to such vehicle, as determined based upon the 
 vehicle identification number of such vehicle.
 ``

    (f) Reporting of Vehicle Energy Performance.--
 ``

    (1) Vehicle manufacturers.--Not later than November 1 of 
 each calendar year (beginning with calendar year 2026), each 
 vehicle manufacturer shall submit to the Secretary a report 
 that includes--
 ``
        (A) the vehicle energy performance for each model 
 of that model year which was manufactured by such 
 manufacturer and sold in the United States, and
 ``
        (B) with respect to each such model of such model 
 year, the number of vehicles of such model and model 
 year sold in the United States during the 1-year period 
 beginning on October 1 of the preceding year.
 ``

    (2) Publication by treasury.--Not later than December 1 
 of each calendar year (beginning with calendar year 2026), the 
 Secretary shall publish the median vehicle energy performance 
 and the best vehicle energy performance for that model year.
 ``

    (g) Regulations.--
 ``

    (1) In general.--Except as provided in paragraph

    (2) , the 
 Secretary shall promulgate such regulations as necessary to 
 carry out the provisions of this section not later than 1 year 
 after the date of enactment.
 ``

    (2) Coordination in prescription of certain 
 regulations.--The Secretary of the Treasury, in coordination 
 with the Secretary of Transportation and the Administrator of 
 the Environmental Protection Agency, shall prescribe such 
 regulations as necessary to determine whether a motor vehicle 
 meets the requirements to be eligible for a credit under this 
 section.''.

    (b) Credit Allowed Against Alternative Minimum Tax.--

Section 38
            (c) (4)
        (B) is amended by redesignating clauses
            (i) through
            (xii) as 
clauses
            (ii) through
            (xiii) , respectively, and by inserting before 
clause
            (ii) (as so redesignated) the following new clause:
 ``
            (i) the credit determined under 

section 30E,''.
            (c) Display of Credit.--

Section 32908

    (b) of title 49, United States 
Code, is amended--

    (1) in paragraph

    (1) --
        (A) by redesignating subparagraphs
        (E) and
        (F) as 
 subparagraphs
        (F) and
        (G) , and
        (B) by inserting after subparagraph
            (D) the 
 following new subparagraph:
 ``
        (E) the amount of the vehicle energy performance credit 
 allowable with respect to the sale of the automobile under 
 

section 30E of the Internal Revenue Code of 1986 (26 U.S.C. 
 30E).'', and

    (2) in paragraph

    (2) , by striking ``paragraph

    (1)
        (E) '' and 
 inserting ``paragraph

    (1)
        (F) ''.
            (d) Conforming Amendments.--

    (1) Section 38

    (b) is amended by striking ``plus'' at the 
 end of paragraph

    (40) , by striking the period at the end of 
 paragraph

    (41) and inserting ``, plus'', and by adding at the 
 end the following new paragraph:
 ``

    (42) the portion of the vehicle energy performance rebate 
 to which 

section 30E
            (c) (1) applies.''.

    (2) Section 1016

    (a) is amended by striking ``and'' at the 
 end of paragraph

    (37) , by striking the period at the end of 
 paragraph

    (38) and inserting ``, and'', and by adding at the 
 end the following new paragraph:
 ``

    (39) to the extent provided in 

section 30E

    (e)

    (1) .''.

    (3) Section 6501
            (m) is amended by inserting ``30E

    (e)

    (6) ,'' 
 after ``30D

    (e)

    (4) ,''.

    (4) The table of section for subpart C of part IV of 
 subchapter A of chapter 1 is amended by inserting after the 
 item relating to 

section 30D the following new item:

``

Sec. 30E. Vehicle energy performance rebate.''.

SEC. 3. LOW VEHICLE ENERGY PERFORMANCE FEE.

    (a) In General.--

Section 4064 is amended to read as follows:

``

SEC. 4064. LOW VEHICLE ENERGY PERFORMANCE FEE.

 ``

    (a) Imposition of Tax.--There is hereby imposed on the sale by 
the manufacturer of each low energy performance vehicle a tax equal to 
the product of $5,000, multiplied by the quotient of--
 ``

    (1) the excess of--
 ``
        (A) the median vehicle energy performance for the 
 model year immediately preceding the model year of such 
 vehicle, over
 ``
        (B) the vehicle energy performance of such 
 vehicle, divided by
 ``

    (2) the excess of--
 ``
        (A) the best vehicle energy performance for the 
 model year immediately preceding the model year of such 
 vehicle, over
 ``
        (B) the median vehicle energy performance for the 
 model year immediately preceding the model year of such 
 vehicle.
 ``

    (b) Low Energy Performance Vehicle.--For purposes of this 
section--
 ``

    (1) In general.--The term `low energy performance 
 vehicle' means a passenger automobile or light truck--
 ``
        (A) which is treated as a motor vehicle for 
 purposes of title II of the Clean Air Act,
 ``
        (B) which achieves vehicle energy performance 
 that is lower than the median vehicle energy 
 performance, and
 ``
            (C) which is made by a manufacturer beginning 
 with model year 2029.
 ``

    (2) Exception for certain vehicles.--The term `low energy 
 performance vehicle' does not include any vehicle--
 ``
        (A) which--
 ``
            (i) has a gross vehicle weight rating of 
 more than 8,500 pounds, and
 ``
            (ii) is determined by the Secretary to be 
 a vehicle which is designed for commercial use, 
 or
 ``
        (B) sold for use and used--
 ``
            (i) as an ambulance or combination 
 ambulance-hearse,
 ``
            (ii) by the United States or by a State 
 or local government for police or other law 
 enforcement purposes, or
 ``
            (iii) for other emergency uses prescribed 
 by the Secretary by regulations.
 ``
            (c) Other 

=== Definitions. ===
-For purposes of this section:
 ``

    (1) Vehicle energy performance.--The term `vehicle energy 
 performance' means, with respect to any vehicle, the combined 
 fuel-economy rating determined for the model and model year of 
 such vehicle.
 ``

    (2) Median vehicle energy performance.--The term `median 
 vehicle energy performance' means, with respect to any model 
 year, the median combined fuel-economy rating for all new motor 
 vehicles of such model year sold in the United States.
 ``

    (3) Best vehicle energy performance.--The term `best 
 vehicle energy performance' means, with respect to any model 
 year, the highest combined fuel-economy rating of any model of 
 motor vehicle of such model year sold the United States.
 ``

    (4) Combined fuel-economy rating.--The term `combined 
 fuel-economy rating' means the combined fuel-economy rating 
 determined in accordance with 

section 32908 of title 49, United 
 States Code, and expressed in miles per gallon of gasoline 
 equivalent.
 ``

    (5) Model year.--The term `model year' has the meaning 
 given such term under 

section 32901

    (a) of such title 49.
 ``

    (6) Motor vehicle.--The term `motor vehicle' means any 
 vehicle which is manufactured primarily for use on public 
 streets, roads, and highways (not including a vehicle operated 
 exclusively on a rail or rails) and which has at least 4 
 wheels.
 ``

    (7) Other terms.--The terms `automobile', `passenger 
 automobile', `light truck', and `manufacturer' have the 
 meanings given such terms in regulations prescribed by the 
 Administrator of the Environmental Protection Agency for 
 purposes of the administration of title II of the Clean Air Act 
 (42 U.S.C. 7521 et seq.).
 ``
            (d) Inflation Adjustment.--In the case of any model year 
beginning in a calendar year after 2029, each dollar amount in 
subsection

    (a)

    (2) shall be increased by an amount equal to--
 ``

    (1) such dollar amount, multiplied by
 ``

    (2) the cost-of-living adjustment determined under 
 

section 1

    (f)

    (3) for the calendar year in which the model year 
 begins, determined by substituting `2028' for `2016' in 
 subparagraph
        (A)
            (ii) thereof.
Any increase determined under the preceding sentence shall be rounded 
to the nearest multiple of $100.''.

    (b) Conforming Amendments.--

    (1) The heading for part I of subchapter A of chapter 32 is 
 amended by striking ``gas'' and inserting ``fuel''.

    (2) The table of parts for subchapter A of chapter 32 is 
 amended by striking ``Gas'' in the item relating to part I and 
 inserting ``Fuel''.

    (3) The table of sections for part I of subchapter A of 
 chapter 32 is amended by striking ``Gas'' in the item relating 
 to 

section 4064 and inserting ``Fuel''.

    (4) The heading for subsection
            (d) of 

section 1016 is 
 amended by striking ``Gas Guzzler Tax'' and inserting ``Low 
 Vehicle Energy Performance Fee''.

    (5) The heading for subsection

    (e) of 

section 4217 is 
 amended by striking ``Gas Guzzler Tax'' and inserting ``Low 
 Vehicle Energy Performance Fee''.

    (6) The heading for subparagraph
        (B) of 

section 4217

    (e)

    (3) is amended by striking ``gas guzzler tax'' and inserting ``low 
 vehicle energy performance fee''.

    (7) Section 4217

    (e) is amended by striking ``gas guzzler 
 tax'' each place it appears and inserting ``low vehicle energy 
 performance fee''.

SEC. 4. FUEL ECONOMY OF DUAL FUELED AUTOMOBILES.

    (a) Measurement of Fuel Economy for Electric Dual Fueled 
Automobiles.--

Section 32905

    (e) of title 49, United States Code, is 
amended--

    (1) in paragraph

    (1) , in the matter preceding subparagraph
        (A) --
        (A) by striking ``At the request of the 
 manufacturer, the Administrator may'' and inserting 
 ``The Administrator shall''; and
        (B) by striking ``model year 2015'' and inserting 
 ``model year 2026''; and

    (2) by amending paragraph

    (2) to read as follows:
 ``

    (2) Review and updating of formula.--Not later than 3 
 years after the date of the enactment of this paragraph, and 
 every 3 years thereafter, the Administrator shall, using real-
 world data if possible, review and update the formula for 
 determining under paragraph

    (1) percentage utilization on 
 gasoline or diesel fuel and percentage utilization on 
 electricity.''.

    (b) Fuel Economy Information for Dual Fueled Automobiles.--

    (1) Labeling requirements and contents.--

Section 32908

    (b)

    (3) of title 49, United States Code, is amended--
        (A) by redesignating subparagraphs
        (B) ,
            (C) , and
            (D) as subparagraphs
            (D) ,
        (E) , and
        (F) , respectively; 
 and
        (B) by inserting after subparagraph
        (A) the 
 following:
 ``
        (B) indicate the fuel economy of the automobile when 
 operated primarily on alternative fuel;
 ``
            (C) indicate the multi-day average fuel economy of the 
 automobile when operated on a combination of alternative fuel 
 and gasoline or diesel fuel, with the percentage utilization of 
 alternative fuel and the percentage utilization of gasoline or 
 diesel fuel being determined by a formula based on real-world 
 data and updated not less frequently than every 3 years;''.

    (2) Fuel economy information booklet.--

Section 32908
            (c) (2)
        (B) of title 49, United States Code, is amended--
        (A) in clause
            (i) , by striking ``; and'' and 
 inserting a semicolon;
        (B) by redesignating clause
            (ii) as clause
            (iii) ; 
 and
            (C) by inserting after clause
            (i) the following:
 ``
            (ii) information on the multi-day average fuel economy of 
 the automobile when operated on a combination of alternative 
 fuel and gasoline or diesel fuel, as indicated under subsection

    (b)

    (3)
            (C) ; and''.
            (c) Applicability.--The amendments made by this section shall apply 
with respect to automobiles of model year 2027 or later.
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